Part of a solid financial plan includes ensuring that you and your belongings are properly covered in the event of a disaster. Most tend to focus on the impact of illness, death, disability, or long-term health care. Sometimes ensuring that property is covered adequately and for a fair price gets lost in the shuffle. We recently reviewed the property and casualty coverage for a client and we thought we would share some of what we found and offer some tips of what to look for in your own coverages. The winter months are a good time to pull out the declaration pages and look at them carefully.
By shopping the coverage we were able to save our client $2,600/yr on their premium! Yes, that is not mis-print. The coverage they had previously was through a nationally recognized and trusted membership association and underwritten by a major insurance company. The relationship they had was not with an agent, but, with an 800 number. There was nobody “home” to go to bat for the client who had been with this company for years.
Some things to look for in automobile coverage:
1. Make sure you obtain the proper level of liability coverage – 500K is usually the max. As clients age they may not be quite the driver that they used to be. If an aging client is at fault for an accident in which someone is hurt you could be sued, especially if a savvy lawyer determines you have assets to lose.
2. Check your deductible. Depending on the company the difference in premium between $500 and $1000 could be substantial. And with others, not so much.
3. Select either full or limited tort. This is where you can save premium with limited tort if you are willing to give up your rights to sue for pain and suffering.
4. Uninsured and Underinsured liability pays for medical expenses for you and a passenger if hit by someone who doesn’t have the right amount or any insurance.
5. The are lots of other bells and whistles that are usually included for little of no cost such as funeral, car towing, loss of work, or accidental death etc.
In the case cited above, the dwelling coverage was substantially lower than what it would actually cost to rebuild. Building and renovation costs have increased significantly over the past few years. You will want to make you’re your coverage levels reflect this change. Personal property coverage should also be appropriately covered. If your belongings are average, lowering the coverage can save you some premium dollars. On the other hand, if you have valuable items in your home be sure to discuss the overall coverage levels with your agent. If they are of significant value, you may want to itemize them and value them for coverage purposes. An example of this is jewelry such as diamond rings and other valuable items that go beyond what is spelled out in the policy. You will need to provide the insurance company with a recent appraisal. In this case with our client, we were able to find an on-line jewelry appraiser that charged just $26 for an appraisal! Much less than the $500 or so you could pay to the local jeweler.
In the case cited, we were able to suggest higher level of homeowners coverages and our client still saved about $300/yr in premiums.
If you have maxed out the amount of bodily injury protection on your automobile and homeowners coverages (usually $500,000) but you have assets valued at substantially more, you can put umbrella coverage on top of both which will protect you if you are at fault in an accident or if someone is injured on your property like a trip and fall event. Umbrella liability coverage is relatively inexpensive – less than $500 usually for 2M of coverage. Make sure you insure close to the value of your assets.
To sum up the importance of this topic, we’d like to share a story very close to home. Over the past year Chip Addis was involved in an automobile accident (no injuries fortunately), had lightning strike his house, and experienced a wind event that tore half the roof off his house and drenched the interior. He did not have one claim in the prior 20 years or more. Luckily he had very good coverage with a good insurance company that covered all of his expenses associated with these events. The total of these claims was about $200,000! We just wanted to illustrate the importance of reviewing your coverages as random events do really happen. He would be happy to share what he learned during that experience as well if anyone you know is faced with a similar situation
Oh, and by the way, that storm cloud image is real – it was taken by a neighbor before straight line winds tore the roof off his house!